� Open Interest vs Volume: What Is the Difference?

👀 You see OI and Volume everywhere in the option chain—but are they actually telling you the same thing?

Not really.

Both can tell you about market activity, but they measure two different things.

🧩 First, What Is Volume?

Volume tells you how many option contracts were traded during a particular period.

For example, if a strike shows:

Volume = 50,000

it means 50,000 contracts were traded during that session.

Think of Volume as:

👉 “How much trading happened?”

🏦 Then, What Is Open Interest?

Open Interest (OI) tells you how many option contracts are still open and outstanding.

When new positions are created, OI can increase.

When existing positions are closed, OI can decrease.

Think of OI as:

👉 “How many contracts are still open?”

🔄 Here's the Simple Difference

VOLUME = Contracts traded

OI = Contracts remaining open

That's the easiest way to remember it.

Imagine a shop:

🛒 Volume = How many customers came into the shop today.

📦 OI = How much inventory is still sitting in the shop.

They are related to activity, but they are not the same thing.

📈 What About Change in OI?

This is where things become more interesting.

Suppose an option has:

OI = 1,00,000

and later:

OI = 1,20,000

The OI has increased by 20,000 contracts.

That tells you that the number of open contracts has increased.

But here's an important point:

⚠️ An increase in OI by itself does not tell you who is bullish or bearish.

You need additional context to interpret it.

🤔 Can Volume Be High While OI Is Low?

Yes.

An option can see a lot of trading during the day while relatively few contracts remain open afterward.

That's why looking at Volume alone can be misleading.

Similarly, a strike can have high OI without necessarily having huge fresh trading activity today.

So don't confuse:

High Volume = lots traded today

with

High OI = lots of contracts remain open

🚨 One Common Mistake

Some traders see:

High OI → “This must be bullish.”

Or:

High Volume → “Buyers are active.”

Not necessarily.

OI and Volume do not tell you buyer direction by themselves.

They are pieces of information that need to be combined with price, change in OI, strike context and the broader market situation.

🧠 Quick Recap

Volume → How many contracts were traded

OI → How many contracts remain open

Change in OI → How open interest is changing

And remember:

Don't read OI or Volume in isolation.

They become more useful when you understand what is happening around them.

We'll build on this step by step in the Option Chain series.

💬 Your Turn

When you analyse the option chain, which do you rely on more?

📊 OI

📈 Volume

🔄 Both

👇 Comment below and tell us why.